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Congratulations! You finally got some money to hire one or more developers or you found enough time to start developing your product on your own. You look at the list of features and capabilities that your product needs to satisfy the needs of your target market and it is huge. You do some rough calculations and unfortunately the number of hours to implement everything is well beyond your financial runway or your market opportunity window. So how do you pick which features to do first?

Let’s first define a Minimum Viable Product. An MVP is simply the minimum set of features that provide the initial value to the user of your product. It is crucial that this first incarnation of your product must show your value differentiation. In other words, not only must it provide that initial functionality for your first users, it also needs to show off why your product is different or unique in the market place.

For example, a smartphone application may show off the integration between the phone’s native features and your application in such a way that the value of your application is extended through the phone. This is a crucial time in the development of a brand new product. Generally speaking, this early version of the product dictates whether the company succeeds or fails.

a. Validation of market assumptions is critical. Even though some market research has been done, at some point one or more assumptions about the needs of the target market were made. In some cases these assumptions are pivotal – i.e. your business rests on whether these assumptions are correct or incorrect. Getting the MVP into the hands of users as well as demonstrating it to experts in the target market, helps to validate some of the assumptions. Course correction at this stage is easier and less costly than when the product is nearly complete.

b. As these early users work with the MVP, they help you to refine the product in such areas as the flow of a specific feature or the user interface. Early users have a tendency to love new technology. They love the fact that they can influence a product’s direction as well as the look and feel in the early stages – at any stage actually, but especially early on. Regular meetings with early users (even if it is in a coffee shop) are crucial in refining the product but also have a side benefit of building a solid relationship. Word of caution: evaluate each suggestion to make sure that it has wide market applicability; creating a product solely based on the feedback of a handful of users is dangerous.

c. The quest to seek funding for your new venture is a continuous event. The days of receiving funding for an idea jotted down on a napkin are long gone. Having the MVP shows investors what value real users will find in the product. It also helps to get the point of your venture across that a slide presentation cannot do. People respond far better to a real product than to a large slide presentation.

But which features do you select? Which market needs do your satisfy first? This debate will be a constant occurrence within your team. Here are a few key points to remember as you go through the process of deciding what features to build.

a. In the end, your target users will use your product to perform one or more specific tasks. The MVP cannot be a set of random disjointed features, but instead must be a set of features that work seamlessly together and allows the user to accomplish the tasks they need. Imagine the team that developed the first bank machine. They probably implemented the ability for a user to withdraw money first. They in all likelihood recognized that this use case was the most important use case – ahead of transferring money, printing account information, etc. The first implementation of this use case most likely had the ability to insert card and enter the PIN, select the amount to withdraw and from which account, and dispense cash. The key here is to understand how your target users perform their primary task today and make sure that they can perform the same task with your MVP.

b. As mentioned earlier, building in your differentiating value is key. Without this your product will be perceived as simply a “me too” product and will not end up getting the interest of your target users and investors. Continuing with the bank machine example. A key differentiator is convenience – the ability to do banking anywhere and anytime replacing the need to go into the bank and wait in line to get money. One can imagine that early machines were placed in the lobby of the bank or in the nearby convenience store. Had the machines been placed inside the bank, making them accessible only during banking hours, they would not have garnered the enthusiasm of the target users.

In summary, the MVP is crucial from an investor-pitch perspective as well as from a product-refinement perspective. Both these activities are crucial in the early stages of a new venture. The trick is to choose the right set of features for the MVP. Make sure that the user can perform one or more or their end-to-end tasks. In other words, make sure that the use case is implemented enough to provide value to the user. The implication here is that you have to know your target users rather intimately.

And lastly, the MVP must have one or more of your key differentiators. The MVP needs to set what you are doing apart from other potentially competitive offerings.